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Investors lock profits,
sending stocks lower
NEW YORK >> Investors apparently had their fill of Federal Reserve Chairman Alan Greenspan's continued upbeat congressional testimony yesterday, using the latest round of disappointing economic data as an excuse to gather profits and send stocks lower.
Before trading opened, the Commerce Department reported a 0.3 percent dip in retail sales for January due to a sharp drop in auto sales -- though without those sales, the retail figure would be up 0.9 percent for the month. Economists had been expecting a flat performance.
First-time unemployment claims for the first full week of February were at 363,000, more than the 345,000 expected by Wall Street and 6,000 higher than the previous week.
"What we're seeing is a little profit-taking after what was a favorable response to the comments the Fed made," said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. "Some of the stocks that moved aggressively Wednesday were very cyclical companies, and now you're seeing rotation back into more defensive positions."
Declining issues outnumbered advancers 5 to 3 on the New York Stock Exchange, where consolidated volume came to 1.91 billion shares, compared with 2.24 billion on Wednesday.
The Dow Jones industrial average fell 43.63, or 0.4 percent, to 10,694.07, a day after the Dow gained 123 points.
Broader stock indicators were also lower. The Standard & Poor's 500 index was down 5.65, or 0.5 percent, at 1,152.11, and the Nasdaq composite index slid 16.05, or 0.8 percent, to 2,073.61. The Russell 2000 index of smaller companies was down 4.32, or 0.7 percent, at 592.75.
The price of the Treasury's 10-year note closed down 532 point, while its yield rose to 4.05 percent from 4.03 percent Wednesday. Two-year Treasury note prices were unchanged, but their yield fell to 1.70 percent from 1.71 percent Wednesday.
Greenspan spent a second day on Capitol Hill, this time before a Senate committee. He continued the themes from Wednesday's House testimony -- better-than-expected gross domestic product growth, a lowered inflation estimate for the year and a warning against mounting federal budget deficits. His outlook sent stocks sharply higher on Wednesday.
Investors were also continuing to weigh Comcast Corp.'s hostile takeover bid for Walt Disney Co. Comcast was down $1.17 at $30.06, while Disney gained 40 cents to $28.00.
"Speaking broadly, more mergers can be a comforting indicator from an investor's perspective," said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. "It shows that companies are comfortable with their own operations, their own management and their own finances."
Health insurer Aetna Inc. climbed $3.20 to $74.80, its highest level in 4 1/2 years, after doubling its fourth-quarter profit from a year ago and boosting its 2004 outlook.
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